Picks of the Day October 18, 2017

Dow Jones 23K

The Dow Jones, for a few brief moments yesterday, broke up to a new high, 23,000 points, only to close a few minutes later beneath that level. What propelled the market higher yesterday was solid numbers from Johnson & Johnson (JNJ) and United Health (UNH). The Dow Jones already succeeded in breaking up new 1,000 point benchmarks on 3 occasions earlier this year, trading consistently up the whole while. The blue chip index is up 2.6% on the month. In the absence of an unexpected shock, the Dow is set to record its 7th straight winning month.

The Dow broke past the 22 thousand point level for the first time just 76 days ago, making it easier and easier for the Dow to reach new, big, round numbers – on a percentage point basis. That has a wonderful psychological effect; every time the Dow hits a new benchmark, the average Joe in America becomes more and more enraptured by financial markets.

Boeing (BA) and Caterpillar (CAT) have contributed most of the points to the Dow since August 2nd, when the Dow broke up for the first time past the 22,000 point level. They tacked on 142 points and 121 points respectively. These two stocks also saw exceptional performances with gains of 65.9% and 41.2% respectively.

The strong economic figures released of late and the renewed hope that Donald Trump will be able to move ahead with his tax reform initiative has also pushed stocks higher over the last few weeks.

United Health (UNH), the largest U.S. health insurer, hit an all-time high, closing sharply up by 5.5% after the company reported higher than expected earnings, raising its full-year forecast.

Financial stocks weighed on the market, Goldman Sachs (GS) recording a decline of 2.6%, despite its higher than expected earnings results and a smaller than expected decline in trading revenues.

Netflix (NFLX) ended off 1.6% after having earlier hit a historic high; the high was reached after a quarterly rise in the number of new digital content subscribers.

In the meantime, the earnings season has gotten off to a good start. About 82% of the companies reporting to date have hit analysts’ earnings forecasts, while 76% have outstripped revenue forecasts.

After Closing: IBM rallied 4.9% on the heels of its numbers, which beat analysts’ forecast.

About 5.5 billion shares changed hands on U.S. exchanges, beneath the 5.9 billion average over the last 20 trading days.

Wednesday: Investors today will focus on the building starts report, along with the Fed Beige Book, a summary of the economic conditions in the 12 Federal Reserve districts.

On the earnings front: IBM, ADTN, CREE, and LRCX are among the companies that reported their quarterly results yesterday after closing. They’ll be commanding attention today. The companies expected to report today before opening include: ABT, AXP, UAL, AA.

On the IPO front, the Chinese company, QD, which specializing in providing online technological credit solutions will be in the spotlight. The company serves hundreds of millions of Chinese people, focusing primarily on young mobile technology clients. QD joins the 6 Chinese companies which have already gone public on Wall Street year-to-date, along with RISE which plans to go public tomorrow. What is it that makes the Chinese issues so attractive? Three words: Performance, Performance, Performance. Of the 6 Chinese IPOs that reported this year, 5 are trading above their issue price, and only one is trading down. The mean yearly gains of the six companies is now 89%, include the losing issue, and not counting the losing company, the gains of the 5 winners average out at 118% – and that’s just the average profit!

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